Tag: Minnesota Supreme Court

This is an update on the Winona, MN case from last year, which can be found here. To recap, homeowners wishing to obtain a rental license in Winona cannot do so if 30% of the properties on their block are already rental properties. The question before the court was whether the 30% rental rule was a valid exercise of the city’s police power, and whether the ordinance was a violation of their equal protection rights under the Minnesota Constitution. The district court granted summary judgment to the City of Winona and the court of appeals affirmed. The applicants then filed a petition for review, which was granted in May 2014.

The City moved to dismiss the appeal for lack of jurisdiction, arguing that the case was moot. Minnesota courts have established “an appeal should be dismissed as moot when a decision on the merits is no longer necessary or an award of effective relief is no longer possible.” Of the three original plaintiffs in the lawsuit, two no longer owned their properties, and the third received a rental license from the city. While acknowledging that their claims were technically moot, they nevertheless argued that they fell within either or both of two narrow exceptions to the mootness doctrine: (1) that the issue being litigated is capable of repetition, yet likely to evade review, and/or that the case is “functionally justiciable” and of “statewide significance.”

The first argument was quickly dispatched by the court since the ordinance, which is continuing to be enforced by the city, is open to challenge at another time. The claims against the ordinance, therefore, are still capable of being reviewed by the courts.

As for the second argument, the Court concluded that the case is not of statewide significance. Although other cities do have rental ordinances they do not all operate in the same manner as the Winona ordinance. While the right to rent is an important property interest, the only population affected in this case was the homeowner’s pursuing a rental license in this one municipality, hardly an urgent or impactful case calling for the application of a narrow exception to the mootness rule.

The appellants’ claims were considered moot and the case was dismissed.

RDNT owns Martin Luther Care Campus in Bloomington. The campus consists of two buildings that offer a variety of services, including assisted living, memory care, skilled nursing, adult day care and transitional care. In September 2011 RDNT applied for a conditional use permit from the City of Bloomington to add a third building to the campus. The additional building would result in a 26 percent increase in the number of rooms on the campus, an 8 percent increase in employees, and an overall increase in building square footage on the campus of 62 percent. People in the community opposed the permit because they worried about an increase in traffic.

The Planning Commission unanimously voted to recommend denial of the permit. It concluded that the proposed addition would violate the comprehensive plan in three ways: (1) it is not adjacent to an arterial or collector street; (2) it is not in close proximity to transit, amenities, and services; and (3) it would not preserve the character of the surrounding low density, single family neighborhood. The Planning Commission also determined that the proposed use violated the City’s conditional use permit ordinance because it would be injurious to the surrounding neighborhood through increased traffic, density and design of the building. This conclusion was based on estimated increases in traffic and on the size, density and design of the proposed building.

The City Council met to consider the recommendations of the Planning Commission. The Council listened to the neighboring landowners that spoke both for and against the proposal, and also reviewed traffic studies from two different experts estimating the future traffic volume that would be generated by the proposed expansion. Ultimately the Council voted four to three to deny the application for the permit, finding that the project would conflict with different comprehensive plan provisions, and also that the project would render the Campus “incompatible with the scale and character of the surrounding low density, single family neighborhood” in violation of the conditional use permit ordinance.

RDNT filed a complaint in district court. The district court ruled for RDNT, finding that the Council “misapplied certain standards, misrepresented the impact of certain studies, and appeared to ignore evidence to the contrary.” On appeal, however, the Court of Appeals sided with the City, holding that the City properly exercised its discretion. RDNT then appealed to the Supreme Court.

The Supreme Court did not address the issues related to compatibility of the proposal with the comprehensive plan, instead limiting its review to the claim that the proposed use would violate the conditional use ordinance. Noting that a court “will reverse a governing body’s decision regarding a conditional use permit application if the governing body acted unreasonably, arbitrarily, or capriciously” the Supreme Court broke this inquiry down into two parts: (1) whether the reasons provided by the city were legally sufficient and, if so, (2) whether the reasons had a factual basis in the record.

Criteria 5 of the conditional use permit ordinance requires the Council to make a finding that “the proposed use will not be injurious to the surrounding neighborhood or otherwise harm the public health, safety and welfare.” Although noting that this standard is imprecise, the Court recognized that it has long held that cities have the right to deny conditional uses “if the proposed use endangers the public health or safety or the general welfare of the area affected or the community as a whole.” Thus the Court concluded that the ordinance standard is legally sufficient.

Regarding the second step, neighbors gave concrete testimony about how the increase in traffic would damage their quality of life. Bloomington relied on multiple traffic studies, data from their City Engineer and detailed factual complaints from residents to determine that this project will injure public health and welfare. The City determined that street capacity alone was not dispositive as to whether an increase in traffic would injure the neighborhood or otherwise harm the public health, safety, and welfare. “The fact that a street could physically handle more traffic does not determine whether the neighborhood or the public could handle more traffic. To paraphrase one of the City’s planners: this is not a capacity issue, it is a livability issue.” The Court, therefore, could not conclude that the City acted unreasonably, arbitrarily, or capriciously.

Based on the record, Bloomington did not act unreasonably, arbitrarily or capriciously when it denied the permit.

Concurring Opinion

Justice Anderson agreed with the majority’s conclusion, but addressed the “alarming argument” advanced by the City “that the City may properly deny a conditional use permit when the proposed use is in conflict with its comprehensive plan.” Justice Anderson believes there is “significant uncertainty in our statutory framework and confusion in our case law concerning the role of comprehensive plans,” and that “constitutional implications [lurk] behind the insistence of the City that a conditional use permit may be denied for any comprehensive plan violation.” After a lengthy historical review of caselaw and legislative amendments to Minnesota’s planning and zoning statutes, Justice Anderson observes that both the courts and legislature have “made hash out of the intersection of comprehensive planning, zoning and property rights law.” He suggests that “comprehensive plans are too long and too general (too “comprehensive”) to provide a reasonable standard” for denying a conditional use permit. Additionally, a conditional use ordinance does not create a “standard” by requiring compliance with the entire comprehensive plan as a prerequisite to obtaining a permit “because a comprehensive plan does not provide sufficiently specific standards to measure compliance.” Finally, Justice Anderson finds it “difficult to envision … how any applicant could comply with the entire comprehensive plan.” He points to several goals in the City’s plan that lend support to RDNT’s project, but believes that “the City, looking for any port in the storm to deny the RDNT application, now weighs these goals as less important than other goals.” In his opinion this “demonstrates the poor standard the comprehensive plan provides and the inherent arbitrariness that exists when the plan is relied upon to make these types of decisions.”

Great River Energy (GRE) is part of the CapX2020 project, which involves installing a high-voltage transmission line from South Dakota to Minnesota. GRE sought easements of land from Minnesota landowners following Minn. Sta. §216E.12, which gives public utilities the power of eminent domain for their projects. Dale and Janet Tauer are landowners of one of the affected properties (218.85 acres) that they have leased out for farming.

In 2012 GRE first notified the Tauers about its intent to condemn a permanent 8.86-acre easement and a temporary 3.38-acre easement. The Tauers elected to compel GRE to purchase the entire property under Minn. Stat. § 216E.12, subd 4, also known as the “Buy-The-Farm” statute. The statute gives landowners subject to condemnation proceedings the option to compel the utility to condemn a fee interest in the landowner’s entire parcel of contiguous, commercially viable land, which would make GRE the outright owner of the entire 218 acres.

The relevant section of the Buy-The-Farm statute reads:

When private real property that is an agricultural or nonagricultural homestead, nonhomestead agricultural land, rental residential property, and both commercial and noncommercial seasonal residential recreational property, as those terms are defined in section 273.13 is proposed to be acquired for the construction of a site or route for a high-voltage transmission line with a capacity of 200 kilovolts or more by eminent domain proceedings, the owner shall have the option to require the utility to condemn a fee interest in any amount of contiguous, commercially viable land which the owner wholly owns in undivided fee and elects in writing to transfer to the utility within 60 days after receipt of the notice of the objects of the petition filed pursuant to section 117.055.

GRE did not need, nor want to own the entire parcel in fee simple and so argued to the district court that when the court rules on a landowner’s election under the Buy-the-Farm statute the court must consider other factors in addition to the factors listed in the statute, including the overall reasonableness of the election.

The Minnesota Supreme Court acknowledged that it utilized a “requirement of reasonableness” in a prior case under the statute; however, the Court noted that since that case was decided there have been amendments to the statute. Those amendments limit the factors for courts’ consideration to whether the parcel is “contiguous, commercially viable, and nonhomestead agricultural land.” Courts cannot inject a “reasonableness” test, nor can the courts consider whether the landowner lives on the parcel, as GRE also argued. Furthermore, the “in any amount” language leaves the parcel size determination up to the landowner, and does not give the Court discretion to determine the reasonableness of the amount for condemnation.

The Supreme Court affirmed the lower courts’ rulings in favor of the Tauers.

Winona, Minnesota’s ordinance restricting the number of rental units to 30% of the total properties on any given block is going to be heard by the Minnesota Supreme Court today. We blogged about the Court of Appeals case here. The Court of Appeals determined that the 30% rule was a valid exercise of the city’s police power, and was not a violation of the Equal Protection clause of the US Constitution.

An article from the Winona Daily News can be found here. According to the article, Mankato, West St. Paul and Northfield, Minnesota have all approved similar ordinances, and I know of at least three Iowa cities that are watching this Minnesota litigation.

Wapiti Park campground in the City of Elk River, Minnesota began operating in 1973, seven years prior to the City enacting a zoning ordinance that, at first, did not permit campgrounds in that location, then permitted them as conditional uses, then even later again removed campgrounds as either conditional or permitted uses. Wapiti Park applied for and was granted a conditional use permit in 1984 (during the period of time when they were allowed as conditional uses) even though it could have continued operating as a nonconforming use. When Wapiti Park later violated the conditions of the conditional use permit the city revoked the permit and asserted that Wapiti Park was no longer authorized to operate the campground. Wapiti Park sued the city. The district court found in favor of Wapiti Park but the Court of Appeals reversed. Wapiti Park appealed to the Minnesota Supreme Court.

One question addressed in this case is whether a landowner of a nonconforming use who voluntarily complies with a later-enacted zoning ordinance relinquishes the nonconforming-use status and the right to operate under that status in the future. This issue has been answered in opposite ways in other jurisdictions. The Minnesota Supreme Court concluded that a landowner does not surrender the right to continue a nonconforming use by obtaining a conditional use permit unless the landowner affirmatively waives the right to be treated as a nonconforming use. Waiving a right in Minnesota requires knowledge of the right and an intent to waive the right. In this case, the City of Elk River had the burden of proving that Wapiti Park had both knowledge of their right to remain a nonconforming use and intended to waive the right when they applied for the conditional use permit. Although Wapiti Park knew of its nonconforming use rights as a campground in 1984 when it applied for a conditional use permit, the city produced nothing for the record to indicate that Wapiti Park intended to waive or subordinate its rights to the city’s zoning regime. The court concluded that the conditional use permit did not alter the Park’s status as a nonconforming use.

The second issue addressed was whether the city had authority to terminate the nonconforming use by revoking the conditional use permit. Minn. Stat. secs. 465.01 and 462.57 describe four circumstances under which a nonconforming use may be terminated. They include eminent domain, discontinuance of the nonconforming use, destruction of the nonconforming use, and judicial determination that the use is a nuisance. The Minnesota Supreme Court ruled that Wapiti Park may continue to operate the campground as a nonconforming use because these statutes do not include the revocation of a previously issued conditional use permit as a condition of termination, and none of the identified four circumstances applied to Wapiti Park. Interestingly, the court identified a nonconforming use as “a constitutionally protected property right,” citing a Connecticut court case and not the Minnesota constitution in support of that proposition.

500, LLC owns a building at 500 N 3rd St. in Minneapolis and would like to develop the building into an office. 500 submitted a site plan application to the City in September 2008, which the Minneapolis City Council approved. Before reviewing the application, however, the Minneapolis Heritage Preservation Commission nominated the property for designation as a local historical landmark, which placed the property “under ‘interim protection,’ which prohibits ‘destruction or inappropriate alteration [of a nominated property] during the designation process’ in the absence of a ‘certificate of appropriateness.'” (Minneapolis, Minn., Code of Ordinances §§ 599.240, 599.320) So 500 submitted an application for a certificate of appropriateness on May 6, 2009, but the City Council denied the application on July 31, 2009. Ten months later, the City Council approved a resolution designating the property as a local historical landmark, which became final and effective in June 2010.

In October 2010, 500 filed this action against the City, alleging that the City Council “violated…§ 15.99, subd. 2(a), because it failed to approve or deny the application for a certificate of appropriateness within 60 days.” Such failure results in automatic approval at the end of the 60-day period. So 500 requested “judgment that its ‘application for [a] certificate of appropriateness [was] approved and granted by operation of law.'” The district court held that Minn. Stat. § 15.99, subd. 2(a) did not apply because “decisions regarding historic preservation are not brought into or linked in logical or natural association with actual zoning decisions.” The court of appeals affirmed on the grounds that “[b]ecause an application for a certificate of appropriateness was a request to ‘make alterations to the property,’ not to conduct a specific use of the land, the court concluded that an ‘application for a certificate of appropriateness is not a request relating to zoning.'”

The question before the court is whether an application to a heritage-preservation commission for a certificate of appropriateness is a “written request relating to zoning” under Minn. Stat. § 15.99, subd. 2(a). If so, the City had only 60 days to “approve or deny” the application submitted by 500, otherwise automatic approval occurs by operation of law. The court must first determine whether the statute is ambiguous. Minn. Stat. § 15.99 subd. 2(a) does not define “relating to” or “zoning,” so the court must apply their plain and ordinary meanings. “Relating to” means “to bring into…association with,” and the court defines “zoning” as “the regulation of ‘building development and uses of property.'” These definitions together indicate that the statute is unambiguous because it “refers to a written request that has a[n] association…to the regulation of building development of the uses of property.” Within this meaning, the 60-day time limit in § 15.99 subd. 2(a) applies.

The City argued that the statute only referred to “those requests…explicitly authorized by an applicable zoning ordinance or statute.” The court disagreed because the City’s interpretation fails to apply the plain and ordinary meaning of “relating to.” Though considered “broad” by the United States Supreme Court, the City’s interpretation of “relating to” conflicts with the court’s requirement “to give meaning to every word and phrase in a statute.” Additionally, the City’s interpretation adds words of limitation. The association mentioned in the statute is to zoning itself, not zoning specifically authorized by zoning ordinances or statutes. Thus the court held that the City’s interpretation of § 15.99 subd. 2(a) is unreasonable.

For 500’s application for a certificate of appropriateness to qualify “as a written request relating to zoning,” the application must have an association with the regulation of building development and the uses of property. The court concluded there to be such an association. First, the heritage-preservation proceedings are associated with zoning because they are similar to hearings on conditional use permits. A certificate of appropriateness affects specific property rights, without which approval of by the Commission or City Council 500 cannot develop the building into an office. This requirement is typical of a zoning restriction. Second, the historic-preservation-enabling laws recognize an association between heritage preservation and zoning. The Minnesota Historic District Act allows municipalities to establish commissions with “the power to provide special zoning conditions for…historic districts” and to “amend zoning ordinances to encompass…historic districts in zoning legislation.” (Minn. Stat. §138.74) These commissions can also approve “use variances to a zoning ordinance.” (Minn. Stat. § 471.193 subd. 3(6)) These laws point towards a definitive association between historic preservation and zoning.

Finally, the City’s heritage-preservation ordinances identify an association an application for a certificate of appropriateness and zoning. “Before issuing a certificate of appropriateness, the Commission must find that any proposed alteration is ‘consistent with the applicable policies of the comprehensive plan.'” “Zoning ordinances implement the policies and goals of the comprehensive plan.” The president of the planning commission even opposed 500’s application because the proposed development was inconsistent with the City’s comprehensive plan, which further supports that an application for a certificate of appropriateness is “a written request relating to zoning.” Having established this, the City failed to approve or deny 500’s application within 60 days, so the court reversed and remanded the case to order the granting of the certificate of appropriateness.

Dr. Rajbir and Dr. Carol Sarpal own a home in the City of North Oaks, Minnesota. The property is subject to two different restrictions. The first is a fifteen foot easement by the North Oaks Company over the northern and western edges of the property for a future trail. The second is the city’s zoning setback regulation that states no building can be within thirty feet of the property line.

In 2006 the Sarpals wanted to build a shed on their property. The Architectural Supervisory Committee (ASC) required the plans for the building before they could apply for a building permit. The ASC also required a “as-built survey” with the specific location of the shed. A City employee provided a survey and told the Sarpals that was the document they needed. This survey shows the “proposed house” and does not encroach on either restriction.

The ASC approved the shed and the Sarpals signed and submitted an application to the City for a building permit that was granted. As the Sarpals started construction they measured from the house as it was built on the property.

After the foundation was laid and the frame was constructed the City inspector approved the construction. However, one year after construction the Sarpals received a letter from the City stating that the shed encroached on the trail easement. It was at this point that the Sarpals noticed the survey obtained from the City was not an “as-built” survey but rather for a “proposed house.”

The Sarpals applied for a variance, which was denied. They then requested an extension of time because concrete foundations poured during winter run a higher risk of cracking. This City approved this request.

After the Sarpals failed to move the shed later in the year the City filed an action in district court requesting an order for the Sarpals to remove it. After a bench trial the court found that the City was equitably estopped from enforcement of the zoning ordinance because they provided the survey. The City appealed to the Court of Appeals, which affirmed.

The City then petitioned for review with the Minnesota Supreme Court. The City argues that the district court abused discretion when it equitably estopped the city from enforcing the zoning ordinance.

For an equitable estoppel claim there must be: 1.) Wrongful conduct on the part of the government, 2.) the party must have reasonably relied on the wrongful conduct, 3.) The party must have incurred a unique expenditure in reliance on the wrongful conduct, and 4.) The balance of the equities must weigh in favor of the estoppel.

The City argues that the mistake with the survey does not constitute “wrongful conduct,” because government action that is erroneous does not automatically constitute “wrongful” action, nor is it established by a simple mistake or imperfect conduct. The Supreme Court agreed. In this case the government action was nothing more than a simple mistake. This does not fulfill the first element necessary for a equitable estoppel.

The district court had also found that the City acted wrongfully when granting a permit based on the plans. However, the City is entitled to rely on the accuracy of the documents provided by landowners. The Sarpals certified the information in the application packet was correct. There is no reason why the City should have noticed or corrected the error in regards to the survey. The district court abused its discretion when it dismissed the City’s claims against the Sarpals. The Minnesota Supreme Court reversed the Court of Appeals decision and remanded the case for further proceedings.

“Where land use regulations, such as the airport zoning ordinance here, are designed to benefit a specific public or governmental enterprise, there must be compensation to landowners whose property has suffered a substantial and measurable decline in market value as a result of the regulations”McShane v. City of Faribault. 292 N.W.2d at 258-59

Leon and Judith DeCook purchased 240 acres of land for $159,600 just north of the Rochester International Airport in Minnesota in 1989. 19 acres of this land fell within Safety Zone A (the most restrictive zone) for the airport. Ordinance No. 3 which allowed for agriculture, commercial or industrial sites controlled this land. No dwellings were allowed in the zone as well as any use that brought more than 10 people to any acre or more than 50 people to a commercial industrial site.

Then in 2002 the Board enacted Ordinance No. 4 which allowed for fewer land uses in Safety Zone A than previously allowed. Ordinance No. 4 also brought another 28 acres of the DeCook’s land into the zone.

In 2005 the DeCooks filed an action in district court arguing that there was a substantial decline in market value of the property that benefited a public or governmental enterprise. They argued this constituted “a constitutional compensable taking under the principles of McShane v. City of Faribault.” Summary judgment was granted for the Board and the DeCooks’ appealed to the Minnesota Court of Appeals. The Court of Appeals held that the DeCooks’ must be compensated if their property had a substantial decline in value and remanded to the district court. A jury found that the property diminished in value by $170,000; however, the district court found that the diminution did not constitute a compensable taking as a matter of law. The court sited that the ordinance did not affect the “primary use” of the DeCook property.

The DeCooks appealed and the Court of Appeals reversed and remanded in favor of the DeCooks. The Airport Zoning Board sought review with the Minnesota Supreme Court. The DeCooks argued that the ruling in McShane controls regulatory taking claims from airport safety-zone ordinances. The Board argued that a more flexible ruling from Penn Central should control the case. The Minnesota Supreme Court determined that the language in Minn. Const. art. I, § 13, which states that, ‘[p]rivate property shall not be taken, destroyed or damaged for public use without just compensation [emphasis added],” is broader than the takings clause in the United States Constitution’s, and because of this McShane controls.

McShane found that whenever a governmental enterprise is benefited and there is a substantial decline in market value there must be compensation to land owners. Whether that diminution is substantial is a question of law. In this case the Supreme Court found that the $170,000 is substantial, in that the damages exceed the purchase price of the 240-acre parcel before the enactment of Ordinance No. 4, which ultimately caused the diminution.

A regulatory taking did occur under the Minnesota Constitution. The Court of Appeals decision was affirmed and the case is remanded to the district court for judgment in favor of the DeCooks.

Except as otherwise provided in this section and notwithstanding any other law to the contrary, an agency must approve or deny within 60 days a written request relating to zoning…. Failure of an agency to deny a request within 60 days is approval of the request. If an agency denies the request, it must state in writing the reasons for the denial at the time that it denies the request.

Lance Johnson owns two parcels of land in Cook County, Minnesota. Parcel A is zoned residential and Parcel B is zoned half residential and half commercial. Despite that parcel A is zoned residential, Johnson had a storage shed that was commercially used. On May 15th, 2001 Johnson filed an application to rezone parcel A and half of parcel B to general commercial use.

The county’s planning committee looked at the application during a public meeting in June and recommended to deny the request. In September the Board of Commissioners reviewed the application at a public hearing. After hearing testimony from the public and Johnson the request was denied. The Board did not state in writing any reasons for the denial.

Then in 2005 Rita’s Grandview Ridge submitted an application to rezone a portion of its property from commercial to residential and for a conditional use permit to build a planned unit development. Both applications were granted. In 2006 Johnson brought a declary judgment action arguing that the commission erroneously denied his application and erroneously approved Rita’s. He also argued the denial constituted a taking of property, all under Minnesota Statute § 15.99, subd. 2.

Summary judgment was granted for the county in district court, stating that the denial was “reasonable.” Later, the Court of Appeals reversed the decision in an unpublished decision, stating that the application was automatically approved under § 15.99 because the county failed to state any written reasons for the denial.

The county then appealed to the Supreme Court, arguing that automatic approval is given only when the application is not acted on within the 60 days. They further argue that the written reasoning is a discretionary function of the statute. Johnson argues that the statute mandates action in writing within 60 days.

In Hans Hagen Homes, Inc v. City of Minnetrista the Supreme Court found that “denial is complete when a city votes to deny the application and adopts a written statement of its reasons for denial, whether or not the city provides notice to the applicant.” Johnson argued that the ruling in Hans Hagen Homes means that denial is not complete until the reasons for denial are provided in writing.

The Court refused to follow Johnson’s reasoning, pointing to a footnote in HansHagen Homes that explicitly left the necessity of providing written reasons within 60 days as an open question. The Court affirmed previous cases that held “a statute may contain a requirement but provide no consequence for noncompliance, in which case we regard the statue as directory, not mandatory.” The Court concluded that the “state in writing the reasons for denial” language in § 15.99 is directory because no consequence for failure to comply is provided in the same sentence (i.e., that the 60-day deadline is in the previous sentence, implying that it only applies to the decision itself). The Supreme Court reversed the decision of the Court of Appeals.